The Institute for Supply Management (ISM) on Wednesday said its non-manufacturing index (which measures growth in U.S. service sector) climbed to 61.6 in September from 58.5 in August, with a reading above 50 indicating growth in the service sector. Economists had expected the index to dip to 58.0
The ISM said its non-manufacturing index climbed to 61.6 in September from 58.5 in August, with a reading above 50 indicating growth in the service sector. Economists had expected the index to dip to 58.0.
With the unexpected increase, the ISM said the non-manufacturing index reached its highest level since the inception of the composite index in 2008.
“The non-manufacturing sector has had two consecutive months of strong growth since the ‘cooling off’ in July,” said Anthony Nieves, Chair of the ISM Non-Manufacturing Business Survey Committee.
“Overall, respondents remain positive about business conditions and the current and future economy,” he added. “Concerns remain about capacity, logistics and the uncertainty with global trade.”
The unexpected increase by the headline index was partly due to a jump by the business activity index, which surged up to 65.2 in September from 60.7 in August.
The employment index also spiked to 62.4 in September from 56.7 in August, indicating a significant acceleration in the pace of job growth in the service sector.
Payroll processor ADP released a report earlier in the day showing employment in the service-providing sector shot up by 184,000 jobs in September.
While the report also said the new orders increased to 61.6 in September from 60.4 in August, the supplier deliveries index rose to 57.0 from 56.0, suggesting deliveries are slowing at a faster rate.
On the inflation front, the prices index climbed to 64.2 in September from 62.8 in August, pointing to the 31st consecutive month of price growth.
The ISM released a separate report on Monday showing a slightly bigger than expected slowdown in the pace of growth in the manufacturing sector in September, partly reflecting supply chain issues.
The purchasing managers index fell to 59.8 in September from 61.3 in August, while economists had expected the index to edge down to 60.3.
The slightly bigger than expected decrease by the index came after it reached its highest level in over fourteen years in the previous month.
Other Economy News : U.S. Private Sector Job Growth Accelerates More Than Expected In September
Reflecting strong job growth in both the goods-producing and service-providing sectors, payroll processor ADP released a report on Wednesday showing a much bigger than expected increase in U.S. private sector employment in the month of September.
ADP said private sector employment jumped by 230,000 jobs in September after climbing by an upwardly revised 168,000 jobs in August.
Economists had expected employment to increase by about 185,000 jobs compared to the addition of 163,000 jobs originally reported for the previous month.
“The labor market continues to impress,” said Ahu Yildirmaz, vice president and co-head of the ADP
Research Institute. “Both the goods and services sectors soared.”
“The professional and business services industry and construction served as key engines of growth,” she added. “They added almost half of all new jobs this month.”
The report said employment in the service-providing sector surged up by 184,000 jobs in September, partly reflecting an increase of 70,000 jobs in the professional and business services industry.
Employment in the goods-producing sector also climbed by 46,000 jobs in September, as the construction industry added 34,000 jobs.
ADP also said employment at medium-sized businesses jumped by 99,000 jobs, while employment at large and small businesses increased by 75,000 jobs and 56,000 jobs, respectively.
“Employment gains are broad-based across industries and company sizes,” said Mark Zandi, chief economist of Moody’s Analytics. “At the current pace of job creation, unemployment will fall into the low 3%’s by this time next year.”
On Friday, the Labor Department is scheduled to release its more closely watched monthly jobs report, which includes both public and private sector jobs.
The report is expected to show employment climbed by about 188,000 jobs in September after jumping by 201,000 jobs in August. The unemployment rate is expected to dip to 3.8 percent from 3.9 percent.